Gov. Scott, others were told about Citizens insurance deal

GARY FINEOUT / The Associated Press

Friday

Jun 14, 2013 at 12:01 AMJun 14, 2013 at 9:42 AM

TALLAHASSEE — Florida Gov. Rick Scott and other top state officials quickly distanced themselves last month from a controversial deal approved by Citizens Property Insurance Corp. to shift thousands of homeowner policies to a start-up insurance company. But emails show the Scott administration and other officials knew in advance about the unique deal.

TALLAHASSEE — Florida Gov. Rick Scott — and other top state officials — quickly distanced themselves last month from a controversial deal approved by Citizens Property Insurance Corp. to shift thousands of homeowner policies to a start-up insurance company.

But emails show that the Scott administration and other officials knew in advance about the unique deal that calls for Citizens, the state-backed insurance giant, to pay $52 million to Heritage Property Insurance and Casualty to absorb 60,000 policies.

Documents obtained by The Associated Press show that a lobbyist representing Heritage had met with a top Scott aide to discuss the transaction. The Scott administration acknowledged that the meeting happened in late March — roughly two months before the Citizens board approved the deal.

Scott's chief of staff Adam Hollingsworth insisted in a statement that no one in the Scott administration took a position before Citizens approved the transaction, known as a "take-out," on May 22.

"Our office does not weigh in for or against any Citizens take-out action. Instead, we expect the experts at Citizens and the Office of Insurance Regulation to act in the best interest of Citizens policyholders and the taxpayers that support the company," Hollingsworth stated.

Other state officials — including Chief Financial Officer Jeff Atwater — were also given information about the deal before the vote. Citizens officials sent an email to Atwater's personal email account the week before that included background material on the transaction.

Atwater, in the wake of news reports questioning the arrangement, talked to a top Citizens official hours before the transaction was approved. A spokeswoman for Atwater's office did not respond to questions about his role.

Citizens also sent material to House and Senate staff, although a Citizens spokesman said that emails to the House were apparently never received.

Citizens does not normally pay companies to absorb its policies although the board did approve a similar transaction earlier the year. Instead, Heritage is being paid to assume any claims associated with policies going back to January. But since Heritage gets to pick the policies it wants, the insurer could cherry-pick policyholders who have no claims pending.

Citizens officials have defended the deal as a way to shrink the size of the state-created insurer. Citizens currently has nearly 1.28 million policyholders. There has been a push to shrink the insurer because of fears that it would not be able to cover claims if a huge hurricane hits the state. Citizens has the power to place a surcharge, also called a "hurricane tax," on its own policies and policies of most insurance policies if it can't cover its losses.

But the backlash against the Heritage deal has already led legislative leaders to call for hearings in the fall to look into how the transaction was constructed.

Senate President Don Gaetz in a statement to senators said the "facts and circumstances surrounding the Heritage transaction need thorough investigation so the people of Florida are assured that it and transactions like it are in the best interest of Floridians."

Some have also questioned the deal because of campaign contributions.

Campaign finance records show that Heritage and affiliated companies have donated $176,000 in contributions since last year. Those donations include $110,000 to a political committee controlled by Scott and more than $40,000 to the Republican Party of Florida. Contributions to Scott's committee came in March.

Heritage representatives met twice with administration officials, according to a Scott spokeswoman. One of those was an introductory meeting in January. Fred Karlinsky, a Fort Lauderdale attorney and insurance lobbyist, met with Scott's deputy chief of staff Michael Sevi on March 27 to discuss the possible deal with Citizens.

Christine Turner Ashburn, the legislative affairs director for Citizens, noted the meeting in a May 17 email to top Citizens officials including CEO and President Barry Gilway. She said she was meeting with Sevi that morning to discuss the Heritage deal again.

"I intend to let him know that we believe we are on track to notice a board meeting for next Wednesday to take up the proposal as we understand the consent order has been or will be issued anytime," Turner Ashburn wrote.

Hollingsworth previously called it "outrageous" that anyone would suggest that the Scott administration influenced Citizens whose board members are appointed by Scott, Atwater and legislative leaders.

But Dan Gelber, a former state senator and leading Florida Democrat, said that "Scott's denials of influence peddling ring pretty hollow in light of these new emails."

Gelber said that Scott needs to return the $110,000 his political committee received "and answer some obvious questions as to why he took the money and what his office did or didn't do for the deal." Gelber's role in criticizing the deal has been called a partisan attack by the Republican Party since Gelber is close to former Gov. Charlie Crist, who may challenge Scott next year.

Bruce Lucas, chairman of Heritage, sent a letter May 31 to Gaetz that his company has been the victim of sensationalized media coverage.

He contends that the final amount Heritage will get out of the transaction may not be $52 million because some Citizens customers may decline coverage. He also disputed the notion that his company will be able to "cherry pick" policies that do not have any claims because some homeowners may not have yet filed claims for this year. Tropical Storm Andrea, for example, brought heavy rains to the state earlier this month.

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